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									                               SECURITY DEPOSITS



Dear Potential Retailer:

We welcome your interest in becoming a Lottery Retailer. The following information will
help you understand our security deposit requirements:

   •   State law permits the Lottery to require a retailer to submit a security deposit to
       protect the financial interests of the state.
   •   New retailers having an unfavorable credit history or no credit history are
       required to submit a security deposit.
   •   The amount of the security deposit is determined by a review of your business
       and/or individual credit report.
   •   The security deposit is held for a period of one year (52 weeks).


The security deposit must be submitted in the form of a:
   • Surety Bond (obtainable through an insurance company)
   • Letter of Credit (obtainable through a bank/financial institution) or a
   • Certificate of Deposit (obtainable through a bank/financial institution.)


After a retailer maintains a favorable payment history with the Lottery for 52 consecutive
weeks, the security deposit will be returned to the retailer.

   •   The payment history of all Lottery retailers is continually reviewed.
   •   When a retailer fails to maintain a good payment history, the retailer is required
       to maintain, or increase a security deposit for a minimum of one year.


If you and/or your financial institution or insurance company has any questions about
the security deposit requirements, please call 1-888-LOTTERY (1-888-568-8379 x102)
or 651-635-8102.
                             MINNESOTA STATE LOTTERY
                          SECURITY DEPOSIT REQUIREMENTS
Minnesota State Lottery applicants who do not have a credit history or do not have a favorable
credit history are required to maintain a security deposit for a minimum of one year. The
security deposit amount required for applicants is based on the credit review completed by our
Accounting Department. This security deposit is due before you can begin selling lottery
tickets.
Current Minnesota State Lottery retailers who do not maintain a good payment history with the
Lottery and or do not have a favorable credit history are also required to submit a security
deposit of $3,000 or two weeks of ticket sales based on their 26 week average, whichever
is higher and maintain it for a minimum of one year.
If you have any questions, please call Retailer Contracts at (651) 635-8111 or toll free at 1-888-
LOTTERY (1-888-568-8379). Please send your original document to:
                                Minnesota State Lottery
                                   PO Box 130700
                                   Roseville, MN 55113

You may choose one of the following Security Deposit options that best suits your business
needs.

                                   CERTIFICATE OF DEPOSIT
A solvent bank or savings association, which exists under the laws of Minnesota, must issue
Certificates of Deposit (CD) or under the laws of the United States having its principal place of
business in Minnesota.
The retailer's tax identification may be used and retailers may collect all interest. During the
period the CD is used as a Security Deposit for the Lottery, only the Lottery may cash the CD.

1. Entitle the CD "Name of Retailer, Assigned to the Minnesota State Lottery”

2. The retailer must complete top ½ of Assignment of Lottery Retailer Certificate of Deposit
form, sign and submit it with the Original CD (See Page 5 of instructions).

3. The Lottery will release the CD upon request from the retailer either 30 days after the final
payment to the Lottery, when a replacement security deposit is submitted, or when the Lottery
determines the CD is no longer required. We will return the CD with the assignment form that
was submitted with the CD or with a notarized letter issued on Lottery letterhead.

                                                               Sample
   CERTIFICATE OF DEPOSIT                                                                          Certificate Number

   Issued To
           RETAILER NAME
           ASSIGNED TO THE MINNESOTA STATE LOTTERY
           Retailer Address
           Retailer City / State / Zip
                                                                                                                  Bank Name
                                                                                                                Bank Address
   CD Related Information from Banking Institution . . .

       This document is available in alternative formats to individuals with disabilities by calling 1-800-657-3833 TTY or
                                        651-635-8268 TTY or the numbers listed above.
                                      SURETY BOND

A sample bond is attached. Following is a general list of the criteria:

1.     It must be purchased through a company authorized to do business in Minnesota.
2.     It must incorporate our bond form that designates the Minnesota State Lottery as the
       beneficiary.
3.     The bond must be self-renewing.
4.     The original, signed bond must be sent to the Lottery at the above address.

                                   LETTER OF CREDIT

A letter of credit filed must provide for the entire items listed blow. A sample is attached. You
may use your own; however, it must include all of the following points:

1.     Nothing more than a demand for payment is necessary for payment and is not conditional
       on the delivery of any other documents or materials.
2.     The letter of credit is irrevocable and cannot be modified or revoked without the consent
       of the Lottery.
3.     The letter of credit cannot expire without notice from the issuer and the notice must occur
       at least 60 days before the expiration of the letter of credit.
4.     The letter of credit is issued by a bank, which is a member of the Federal Reserve
       System that has a long-term debt rating by a recognized national rating agency of
       investment grade or better. If no long-term debt rating is available, the financial institution
       must have investment grade financial characteristics.
5.     The letter of credit is unconditional, is not conditional upon reimbursement to the bank or
       the bank's ability to perfect any lien or security interest, and does not contain references
       to any other agreement, document or entity.
6.     The letter of credit must designate the Minnesota State Lottery as beneficiary.

A letter of credit will be released 30 days after the last payment to the Lottery, after it has
expired or when a replacement security deposit has been submitted.


                                   OTHER SECURITIES

       If you want to use a Security deposit other than a Surety Bond, Certificate of Deposit, or
Letter of Credit, please call Retailer Contracts for approval.




                                                   2
                Sample Letter of Credit--Must be on Bank Letterhead


Date

Minnesota State Lottery
PO Box 130700
Roseville, MN 55113

To Whom It May Concern:

By order of (Retailer name), we are instructed to open a clean, irrevocable Letter of Credit in
your favor for United States (Dollar Amount).

We undertake that drawings under this Letter of Credit will be honored upon presentation of
your draft drawn on (Name of Bank) at (Bank's Address) prior to expiration date for funds due
from (Retailer Name) as a result of the sale of lottery tickets to which (Retailer Name) has failed
to make timely payments to the Minnesota State Lottery.

The Letter of Credit expires on (Date), but will be automatically extended for an additional one
year if you have not received by registered mail notification of intention not to renew 60 days
prior to the original expiration date and each subsequent expiration date.

Except as expressly stated herein, this undertaking is not subject to any condition or
qualification. The obligation of (Issuing Bank), under this Letter of Credit shall be the individual
obligation of (Issuing Bank), and is in no way contingent upon reimbursement with respect
thereto.

Signature of Proper Bank Official
Title




                                                  3
                    Sample Bond - Insurance Company Heading
Lottery Retailer Number (For current retailers only)

KNOW ALL MEN BY THESE PRESENTS, THAT WE (Name of Business) of (business address)
as Principal, (hereinafter called Principal), and (Insurance Company), a corporation organized
and existing under the laws of the State of Minnesota with its Home Office in the City of (location
of Insurance Company) as Surety, (hereinafter called Surety), are held and firmly bond unto
       Minnesota State Lottery
       2645 Long Lake Road
       Roseville, Minnesota 55113

as obligee, in the full and just sum of (Amount) Dollars, lawful money of the United States of
America, to be paid to the said Obligee, successors or assigns, on demand for and on account
of any funds due from the Principal as a result of the sale of lottery tickets to which the Principal
has failed to make timely payments to the obligee; for which payment, well and truly to be made,
we bind ourselves, our heirs, executors, administrators, successors and assigns, jointly and
severally, firmly by these presents. The aggregate liability of the Surety hereunder on all claims
whatsoever shall not exceed the penal sum of this bond in any event.

WHEREAS in accordance with Minnesota Statutes, Chapter 349A, the Principal has entered, or
is about to enter, into a written Agreement with the Obligee to be financially responsible to the
Lottery for all revenues derived from the sale of Minnesota State Lottery tickets as is more
specifically set forth in said Agreement, to which reference is hereby made.

NOW, THEREFORE, THE CONDITION OF THIS OBLIGATION IS SUCH, that if the Principal
shall well and truly perform and carry out the covenants, terms and conditions of said
Agreement, then this obligation to be void; otherwise to remain in full force and effect. The
surety may cancel this bond by written notice to the Principal and Obligee, by Certified Mail, at
least thirty (30) days in advance of the date of cancellation.

Sealed without seals and dates this (date) day of (month, year).

                  ADDITIONAL INFORMATION AND SIGNATURES:

                                     Two witnesses
                                     Business Name
                             Original Surety Company Seal
                                         Principal
                            Attested to (Insurance Company)
                                          Surety
                         Surety Address, phone and fax numbers




                                                  4
                                         ASSIGNMENT OF LOTTERY RETAILER
                                              CERTIFICATE OF DEPOSIT

Lottery Retailer Name:                                                                          Retailer Number:

Bank Issuing Certificate of Deposit:

CD Number:                                                                                      CD Amount:

   The undersigned is a Lottery retailer under section 349A.01, Subd. 11, Minnesota Statutes. The undersigned is
posting a Certificate of Deposit issued by the bank named above under Section 349A.06, Subd. 3, Minnesota Statutes.
   Accordingly, the undersigned hereby assigns to the Lottery, State of Minne     sota (the "Lottery") the Certificate of
Deposit referred to above, all other rights of the depositor in connection with that certificate, and all renewals and
proceeds of that certificate (collectively, the "Certificate"), as follows:
1.    All rights to the Certificate, including the rights to withdraw funds from the Certificate and to renew the
     Certificate may be exercised only by the Lottery until the Lottery has released the above assignment by signing
     and delivering to the Bank and/or Lottery retailer the release form below or other release form acceptable
     to the Bank.
2.   All notices related to the Certificate shall be sent to the undersigned, but the undersigned acknowledges that
     all renewal decisions must be made by the Lottery.




                                                                            Print Name (Authorized Retailer)


                 Date                                                         Signature (Authorized Retailer)


      NOTE: Section below will be completed and signed by the Lottery when the certificat e
            is released.

                                                           RELEASE
      The Minnesota State Lottery, State of Minnesota, hereby releases the above referenced
                    Certificate of Deposit to the Lottery retailer named above.




                                                                                              Print Name



                                                                                                   Title


                  Date                                                                         Signature

                         QUESTIONS: Please call us at 1-888-LOTTERY (1-888-568-8379), ext. 238 / 651-635-8238; 1-800-657-3833 TTY / 651-635-8268 TTY
MSL-00740 04/23/02
                         This document is available in alternative formats to individuals with disabili ties by calling the numbers listed above.

								
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